Scale invariant properties of public debt growth
Public debt is one of the important economic variables that quantitatively describes a nation's economy. Because bankruptcy is a risk faced even by institutions as large as governments (e.g. Iceland), national debt should be strictly controlled with respect to national wealth. Also, the problem...
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ftrepec:oai:RePEc:arx:papers:1002.2491 2024-04-14T08:13:44+00:00 Scale invariant properties of public debt growth Alexander M. Petersen Boris Podobnik Davor Horvatic H. Eugene Stanley http://arxiv.org/pdf/1002.2491 unknown http://arxiv.org/pdf/1002.2491 preprint ftrepec 2024-03-19T10:27:55Z Public debt is one of the important economic variables that quantitatively describes a nation's economy. Because bankruptcy is a risk faced even by institutions as large as governments (e.g. Iceland), national debt should be strictly controlled with respect to national wealth. Also, the problem of eliminating extreme poverty in the world is closely connected to the study of extremely poor debtor nations. We analyze the time evolution of national public debt and find "convergence": initially less-indebted countries increase their debt more quickly than initially more-indebted countries. We also analyze the public debt-to-GDP ratio R, a proxy for default risk, and approximate the probability density function P(R) with a Gamma distribution, which can be used to establish thresholds for sustainable debt. We also observe "convergence" in R: countries with initially small R increase their R more quickly than countries with initially large R. The scaling relationships for debt and R have practical applications, e.g. the Maastricht Treaty requires members of the European Monetary Union to maintain R Report Iceland RePEc (Research Papers in Economics) |
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Public debt is one of the important economic variables that quantitatively describes a nation's economy. Because bankruptcy is a risk faced even by institutions as large as governments (e.g. Iceland), national debt should be strictly controlled with respect to national wealth. Also, the problem of eliminating extreme poverty in the world is closely connected to the study of extremely poor debtor nations. We analyze the time evolution of national public debt and find "convergence": initially less-indebted countries increase their debt more quickly than initially more-indebted countries. We also analyze the public debt-to-GDP ratio R, a proxy for default risk, and approximate the probability density function P(R) with a Gamma distribution, which can be used to establish thresholds for sustainable debt. We also observe "convergence" in R: countries with initially small R increase their R more quickly than countries with initially large R. The scaling relationships for debt and R have practical applications, e.g. the Maastricht Treaty requires members of the European Monetary Union to maintain R |
format |
Report |
author |
Alexander M. Petersen Boris Podobnik Davor Horvatic H. Eugene Stanley |
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Alexander M. Petersen Boris Podobnik Davor Horvatic H. Eugene Stanley Scale invariant properties of public debt growth |
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Alexander M. Petersen Boris Podobnik Davor Horvatic H. Eugene Stanley |
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Alexander M. Petersen |
title |
Scale invariant properties of public debt growth |
title_short |
Scale invariant properties of public debt growth |
title_full |
Scale invariant properties of public debt growth |
title_fullStr |
Scale invariant properties of public debt growth |
title_full_unstemmed |
Scale invariant properties of public debt growth |
title_sort |
scale invariant properties of public debt growth |
url |
http://arxiv.org/pdf/1002.2491 |
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Iceland |
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Iceland |
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http://arxiv.org/pdf/1002.2491 |
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